skip to content

Faculty of Economics

Journal Cover

Acconcia, A., Corsetti, G. and Simonelli, S.

Liquidity and Consumption: Evidence from Three Post-earthquake Reconstruction Programs in Italy

American Economic Journal: Macroeconomics

Vol. 12 no. 3 pp. 319-346 (2020)

Abstract: In Italian regions hit by earthquakes, homeowners typically receive public funds to finance reconstruction. While these funds are strictly tied to reconstruction work, they are in part disbursed up front, leading to significant variation in cash on hand. We exploit this variation to study the effects of liquidity on relatively wealthy households' consumption. We find a large and significant response in the first year that homeowners receive the cash and provide evidence that this response is driven by illiquid households with bank debt. Instead, we find no evidence that consumption responds to funds paid directly to firms, thus leaving households' liquidity unaffected.

JEL Codes: E21, G51, H76, Q54, R31

Author links: Giancarlo Corsetti  

Publisher's Link:

Open Data link:

Papers and Publications

Recent Publications

Huffman, D., Raymond, C. and Shvets, J. Persistent Overconfidence and Biased Memory: Evidence from Managers American Economic Review [2022]

Merrick Li, Z. and Linton, O. A ReMeDI for Microstructure Noise Econometrica [2022]

Ding, Y. A Simple Joint Model for Returns, Volatility and Volatility of Volatility Journal of Econometrics [2023]

Rauh, C. and Valladares-Esteban, A. On the Black-White Gaps in Labor Supply and Earnings over the Lifecycle in the US Review of Economic Dynamics [2023]